On Monday, the US dollar (USD) saw a slight decline, which allowed the GBP/USD pair to recover from its earlier dip in the Asian session, climbing back above the 1.3100 level. Still, there’s quite a bit of uncertainty regarding the upcoming UK budget, along with rising expectations for a potential rate cut from the Bank of England (BoE) next month, which may pose challenges for spot prices.
Looking at the technical side, a recent drop below the crucial 200-day simple moving average (SMA) has sparked concern about a bear market for GBP/USD. Additionally, the daily chart’s oscillator indicates a significant negative trend, suggesting that sellers might step in near the 1.3120-1.3125 range. If that resistance holds, the next hurdle is around 1.3155-1.3160, last week’s swing high. If that level is breached, we could see a short-covering rally.
A potential upward movement could help the GBP/USD pair reclaim the 1.3200 mark and possibly advance past the intermediate resistance of 1.3250, heading towards the key 200-day SMA, currently near 1.3300. A sustained push above this level might shift the short-term outlook in favor of bullish traders and possibly open up more upside in the near term.
On the flip side, the 1.3040-1.3035 range, which marked a two-week low last Thursday, may act as immediate support, just ahead of the psychological level at 1.3000. If that level is breached solidly, the next significant support could be around 1.2950, and further declines might eventually see the GBP/USD testing levels below 1.2900.
